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Private-label RMBS market has cause to celebrate

As 2021 draws to a close, it’s clear that the private-label RMBS market has notched a year for the record books.
The post Private-label RMBS market has cause to celebrate appeared first on HousingWire.

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As 2021 draws to a close, it’s clear that the private-label residential mortgage-backed securities (RMBS) market has notched a year for the record books.

For the full year, the RMBS 2.0 market — defined as all post-financial-crisis prime, non-prime and credit-risk transfer (CRT) transactions — is projected to exceed $115 billion in issuance. That’s more than twice the volume recorded in 2020 and nearly double 2019’s $60 billion mark as well, according to a recent forecast from the Kroll Bond Rating Agency (KBRA).

“Low mortgage rates, stable collateral performance and comparatively favorable spreads for much of the year showed a strong level of investor demand in RMBS paper, making 2021 the record post-global-financial-crisis issuance year,” the KBRA forecast states.

The major driver of private-label issuance this year has been the jumbo-loan market. RMBS offerings backed by jumbo loans are projected to reach the $60 billion level for 2021, according to estimates by Redwood Trust, a sponsor of multiple private-label offerings through its Sequoia securitization program.

The value of transactions backed by investment properties, including second homes, stood at nearly $23 billion as of the end of November, according to data from KBRA and digital-mortgage exchange MAXEX.

Securitizations in the non-QM market are projected to reach $25 billion in 2021, according to estimates from Dane Smith, president of Verus Mortgage Capital, and Tom Hutchens, executive vice president of production at Angel Oak Mortgage Solutions.

Non-QM mortgages include loans that cannot command a government, or “agency,” stamp through Fannie Mae or Freddie Mac. Non-QM loans typically make use of alternative-income documentation because borrowers cannot rely on conventional payroll records or otherwise fall outside agency credit guidelines. The pool of non-QM borrowers includes real estate investors, property flippers, foreign nationals, business owners and the self-employed, as well as a smaller group of homebuyers facing credit challenges, such as past bankruptcies. 

On the CRT front, government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac recorded a combined issuance through mid-December of nearly $18 billion, according to GSE transaction records. Through a CRT transaction, private investors participate with Fannie and Freddie in sharing a portion of the mortgage credit risk in the reference loan pools retained by the GSEs. 

Despite the outsized performance of the private-label market in 2021, compared to the prior post-crisis years, the so-called non-agency sector remains well below the level of market dominance it commanded in 2005 and 2006 — just prior to the housing-industry crash. At that time, it represented nearly 60% of RMBS issuance across agency and non-agency lines. 

“The non-agency share of mortgage securitizations increased gradually over the post-crisis years, from 1.83% in 2012 to 5% in 2019,” a recent Urban Institute report states. “In 2020, the non-agency share dropped to 2.44%, and as of September 2021, it stood at 3.79%.”

The Urban Institute report, produced by its Housing Finance Policy Center, notes that the steep decline in private-label activity in 2020 — as a share of the entire securitization market — was due, in part, to expanded agency refinancing activity as well as “less non-agency production due to dislocations caused by COVID-19.”

“The [private-label] market is recovering in 2021, although the share remains lower than 2019,” the report notes. “While the share is lower, as [GSE] securitization volume is high due to refi activity, this is the largest year of non-agency securitization since 2008.”

The 800-pound gorilla in the private-label space in 2021, as reported previously by HousingWire, is J.P. Morgan, the investment bank side of New York-based banking holding company JPMorgan Chase & Co.  

J.P. Morgan, via its private label conduit, J.P. Morgan Mortgage Trust, through mid-December had sponsored 15 offerings backed by jumbo loans with a total value of $16.4 billion and eight investment-property/second home-backed securitization deals valued at $3.9 billion, according to bond-rating agency reports. The combined value of those private-label transactions, $20.3 billion, represents nearly 18% of KBRA’s projected $115 billion in deal volume for the entire private-label market this year.

For J.P. Morgan’s jumbo-loan securitizations, bond-rating agency reports show that nearly 50% of the mortgages involved in those deals were originated in California.

“California has by far the highest prices in the country, with the median price of a home today in the state over $800,000,” said Rick Sharga, executive vice president of marketing for real-estate research firm RealtyTrac. “And, so that prices most borrowers out of getting a conventional loan, even with the higher [GSE loan-limit] allowance. 

“So, you’re going to have a higher percentage of jumbo loans in California … and California also has a high percentage of overall sales relative to other states.”

Adds Tom Piercy, managing director of Denver-based Incenter Mortgage Advisors: “The jumbo market has expanded as we’ve seen property values increase nationwide. … The appetite for jumbo loans has increased significantly.”

Rising interest rates, coupled with increased agency loan limits and the Federal Housing Finance Agency’s decision to suspend the cap on the purchase of mortgages backed by investment properties, however, are expected to slow the growth of the private-label market in the year ahead. 

The Federal Reserve is increasing the pace of its bond tapering in the months ahead, including reducing its purchases of mortgage-backed securities. It also is planning up to three bumps in the benchmark interest rate in the year ahead. That upward pressure on rates is expected to bend the arc upward on 30-year fixed rates as well, depressing the housing-refinance market.

“It is still expected that [jumbo] RMBS issuance will start to slow in the coming months as rates rise and supply wanes,” states MAXEX’s December market report. “…We continue to think that issuance [of RMBS backed by investment properties also] will subside in 2022 as originators sell many of these loans back to the agencies.” 

Still, the non-agency market is expected to continue to expand in the year ahead, even if it’s at a slower pace than in 2021, according to KBRA.

“Our fiscal year 2022 forecast is $132 billion across the prime, non-prime, and CRT segments, which, if realized, would make it a new record year for RMBS issuance post-GFC [global financial crisis] and an approximately 15% year-over-year increase from 2021,” KBRA’s market-projection report states.

Rising rates, rising GSE loan limits, the suspension of GSE caps on the purchase of investment property mortgages, as well as a housing market that is shifting toward purchase loans, are in combination, then, expected to act as a governor on the growth of securitization volume in the year ahead. At least that may be the case for the jumbo and agency-eligible investment-property segments of the private label market.

But that rising-rate environment is expected to be a boon for the non-QM sector. Verus’ Smith projects that non-QM private-label issuance will swell to over $40 billion in 2022, approaching a doubling of this year’s already robust transaction volume.

“We believe the conditions are ripe for considerable growth of the expanded non-agency market,” Smith said. “Considerable unmet demand for mortgage financing exists from self-employed borrowers and real estate investors. 

“… We are also seeing considerable renewed interest from mortgage lenders who are looking to diversify their product mix away from conventional refinances.” 

The post Private-label RMBS market has cause to celebrate appeared first on HousingWire.

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“The Real President Is Whoever Controls The Teleprompter”: Musk Delivers Scathing Criticism Of Biden

"The Real President Is Whoever Controls The Teleprompter": Musk Delivers Scathing Criticism Of Biden

Authored by Jack Phillips via The Epoch…

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"The Real President Is Whoever Controls The Teleprompter": Musk Delivers Scathing Criticism Of Biden

Authored by Jack Phillips via The Epoch Times,

Tech billionaire Elon Musk this week warned that the United States must take steps to address inflation or it will end up like socialist Venezuela.

Musk, who is currently in the process of acquiring Twitter, told a virtual conference that he believes the government has printed too much money in recent years.

“I mean, the obvious reason for inflation is that the government printed a zillion amount of more money than it had, obviously,” Musk said, likely referring to COVID-19 relief stimulus packages worth trillions of dollars that were passed in recent years.

U.S. inflation rose by 8.3 percent in April, compared with the previous year. That’s slightly lower than the 8.5 percent spike in March, but it’s still near the 40-year high.

“So it’s like the government can’t … issue checks far in excess of revenue without there being inflation, you know, velocity of money held constant,” the Tesla CEO said.

“If the federal government writes checks, they never bounce. So that is effectively creation of more dollars. And if there are more dollars created, then the increase in the goods and services across the economy, then you have inflation, again, velocity of money held constant.”

If governments could merely “issue massive amounts of money and deficits didn’t matter, then, well, why don’t we just make the deficit 100 times bigger,” Musk asked. “The answer is, you can’t because it will basically turn the dollar into something that is worthless.”

“Various countries have tried this experiment multiple times,” Musk said.

“Have you seen Venezuela? Like the poor, poor people of Venezuela are, you know, have been just run roughshod by their government.”

In 2018, Venezuela, a country with significant reserves of oil and gas, saw its inflation rise more than 65,000 percent amid an economic crash that included plummeting oil prices and government price controls. The regime of Nicolas Maduro then started printing money, thereby devaluing its currency, which caused prices to rapidly increase.

During the conference, Musk also said the Biden administration “doesn’t seem to get a lot done” and questioned who is actually in charge. 

“The real president is whoever controls the teleprompter,” he said.

“The path to power is the path to the teleprompter.”

“The Trump administration, leaving Trump aside, there were a lot of people in the administration who were effective at getting things done,” he remarked.

Musk’s comment about the White House comes as Jeff Bezos, also one of the richest people in the world, has increasingly started to target the administration’s economic policies. Bezos, in a series of Twitter posts, said the rapid increase in federal spending is the reason why inflation is as high as it is.

“Remember the Administration tried their best to add another $3.5 TRILLION to federal spending,” Bezos wrote on Monday, drawing rebuke from several White House officials. “They failed, but if they had succeeded, inflation would be even higher than it is today, and inflation today is at a 40-year high.”

Tyler Durden Tue, 05/17/2022 - 15:05

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Type-I interferon stops immune system ‘going rogue’ during viral infections

Hamilton, ON (May 17, 2022) – McMaster University researchers have found not only how some viral infections cause severe tissue damage, but also how…

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Hamilton, ON (May 17, 2022) – McMaster University researchers have found not only how some viral infections cause severe tissue damage, but also how to reduce that damage.

Credit: Georgia Kirkos/McMaster University

Hamilton, ON (May 17, 2022) – McMaster University researchers have found not only how some viral infections cause severe tissue damage, but also how to reduce that damage.

 

They have discovered how Type I interferon (IFN) stops the immune system ‘going rogue’ and attacking the body’s own tissues when fighting viral infections, including COVID-19.

 

Their paper was published in the journal PLOS Pathogens today.

  

Senior author Ali Ashkar said IFN is a well-known anti-viral signalling molecule released by the body’s cells that can trigger a powerful immune response against harmful viruses.

 

“What we have found is that it is also critical to stop white blood cells from releasing protease enzymes, which can damage organ tissue. It has this unique dual function to kick start an immune response against a viral infection on the one hand, as well as restrain that same response to prevent significant bystander tissue damage on the other,” he said.

 

The research team investigated IFN’s ability to regulate a potentially dangerous immune response by testing it on both flu and the HSV-2 virus, a highly prevalent sexually transmitted pathogen, using mice. Data from COVID-19 patients in Germany, including post-mortem lung samples, was also used in the study.

 

“For many viral infections, it is not actually the virus that causes most of the tissue damage, it is our heightened immune activation towards the virus,” said Ashkar, a professor of medicine at McMaster.

  

First co-author of the study and PhD student Emily Feng said: “Our body’s immune response is trying to fight off the virus infection, but there’s a risk of damaging innocent healthy tissue in the process. IFNs regulates the immune response to only target tissues that are infected.

 

“By discovering the mechanisms the immune system uses that can inadvertently cause tissue damage, we can intervene during infection to prevent this damage and not necessarily have to wait until vaccines are developed to develop life-saving treatments,” she added.

 

“This applies not just to COVID-19, but also other highly infectious viruses such as flu and Ebola, which can cause tremendous and often life-threatening damage to the body’s organs,” said first study co-author Amanda Lee, a family medicine resident. 

 

Ashkar said the release of harmful proteases is the result of a ‘cytokine storm’, which is life-threatening inflammation sometimes triggered by viral infections. It has been a common cause of death in patients with COVID-19, but treatment has been developed to prevent and suppress the cytokine storm.

 

Ashkar said that steroids like dexamethasone are already used to rein in an extreme immune response to viral infections. The authors used doxycycline in their study, an antibiotic used for bacterial infections and as an anti-inflammatory agent, inhibits the function of proteases causing the bystander tissue damage.

 

Lee added: “This has the potential in the future to be used to alleviate virus-induced life-threatening inflammation and warrants further research.” 

 

The study was funded by the Canadian Institutes of Health Research.

 

-30-

 

Editors:

Pictures of Ali Ashkar and Emily Feng may be found at https://bit.ly/3wmSw0D

  

 

 


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mRNA vaccines like Pfizer and Moderna fare better against COVID-19 variants of concern

A comparison of four COVID-19 vaccinations shows that messenger RNA (mRNA) vaccines — Pfizer-BioNTech and Moderna — perform better against the World…

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A comparison of four COVID-19 vaccinations shows that messenger RNA (mRNA) vaccines — Pfizer-BioNTech and Moderna — perform better against the World Health Organization’s variants of concern (VOCs) than viral vector vaccines — AstraZeneca and J&J/Janssen. Although they all effectively prevent severe disease by VOCs, the research, publishing May 17th in the open access journal PLOS Medicine, suggests that people receiving a viral vector vaccine are more vulnerable to infection by new variants.

Credit: Carlos Reusser Monsalvez, Flickr (CC0, https://creativecommons.org/publicdomain/zero/1.0/)

A comparison of four COVID-19 vaccinations shows that messenger RNA (mRNA) vaccines — Pfizer-BioNTech and Moderna — perform better against the World Health Organization’s variants of concern (VOCs) than viral vector vaccines — AstraZeneca and J&J/Janssen. Although they all effectively prevent severe disease by VOCs, the research, publishing May 17th in the open access journal PLOS Medicine, suggests that people receiving a viral vector vaccine are more vulnerable to infection by new variants.

By March 2022, COVID-19 had caused over 450 million confirmed infections and six million reported deaths. The first vaccines approved in the US and Europe that protect against serious infection are Pfizer-BioNTech and Moderna, which deliver genetic code, known as mRNA, to the bodies’ cells, whereas Oxford/AstraZeneca and J&J/Janssen are viral vector vaccines that use a modified version of a different virus — a vector — to deliver instructions to our cells. Three vaccines are delivered as two separate injections a few weeks apart, and J&J/Janssen as a single dose.

Marit J. van Gils at the University of Amsterdam, Netherlands, and colleagues, took blood samples from 165 healthcare workers, three and four weeks after first and second vaccination respectively, and for J&J/Janssen at four to five and eight weeks after vaccination. Samples were collected before, and four weeks after a Pfizer-BioNTech booster.

Four weeks after the initial two doses, antibody responses to the original SARS-CoV-2 viral strain were highest in recipients of Moderna, followed closely by Pfizer-BioNTech, and were substantially lower in those who received viral vector vaccines. Tested against the VOCs – Alpha, Beta, Gamma, Delta and Omicron – neutralizing antibodies were higher in the mRNA vaccine recipients compared to those who had viral vector vaccines. The ability to neutralize VOCs was reduced in all vaccine groups, with the greatest reduction against Omicron. The Pfizer-BioNTech booster increased antibody responses in all groups with substantial improvement against VOCs, including Omicron.

The researchers caution that their AstraZeneca group was significantly older, because of safety concerns for the vaccine in younger age groups. As immune responses tend to weaken with age, this could affect the results. This group was also smaller because the Dutch government halted use for a period.

van Gils concludes, “Four COVID-19 vaccines induce substantially different antibody responses.”

#####

In your coverage, please use this URL to provide access to the freely available paper in PLOS Medicine:

http://journals.plos.org/plosmedicine/article?id=10.1371/journal.pmed.1003991

Citation: van Gils MJ, Lavell A, van der Straten K, Appelman B, Bontjer I, Poniman M, et al. (2022) Antibody responses against SARS-CoV-2 variants induced by four different SARS-CoV-2 vaccines in health care workers in the Netherlands: A prospective cohort study. PLoS Med 19(5): e1003991. https://doi.org/10.1371/journal.pmed.1003991

 

Author Countries: The Netherlands, United States

 

Funding: This work was supported by the Netherlands Organization for Scientific Research (NWO) ZonMw (Vici grant no. 91818627 to R.W.S., S3 study, grant agreement no. 10430022010023 to M.K.B.; RECoVERED, grant agreement no. 10150062010002 to M.D.d.J.), by the Bill & Melinda Gates Foundation (grant no. INV002022 and INV008818 to R.W.S. and INV-024617 to M.J.v.G.), by Amsterdam UMC through the AMC Fellowship (to M.J.v.G.) and the Corona Research Fund (to M.K.B.), and by the European Union’s Horizon 2020 program (RECoVER, grant no. 101003589 to M.D.d.J). The funders had no role in study design, data collection and analysis, decision to publish, or preparation of the manuscript.


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